STINGRAY CELEBRATES
IPO better than expected
Stingray Digital Group Inc. celebrated with a surprise staff party at the Montreal offices on Wednesday, when it began life as a publicly traded company with stock price soaring above the value set in its $140-million initial public offering.
After about 90 minutes of trading, Stingray was the most active company on the Toronto Stock Exchange, and its shares, listed at $6.25, were up 16 per cent to $7.25 on volume of 8.5 million shares when the market closed.
“Today was perfect for us and for the employees,” said CEO Eric Boyko. “I think it’s good for Canada because it really shows that non-resource companies can do very well.”
Stingray focuses on sales of its almost 50 music channels for hotels and other businesses, such as Reitmans Canada Ltd., as well as consumers via pay-TV packages, which reach over 110 million subscribers in 111 countries.
Stingray started eight years ago as a private company with support from private-equity investors Telesystem Ltd. and Novacap Investments Inc.
Boyko says the financial crisis of 2008 helped to launch a series of acquisitions. “While every country in the world was having trouble with their banks, as a Canadian I could take that advantage and reinvest to buy these companies at a low multiple,” he said.
“For me, the crisis was a good time.”
After seeing Stingray through 18 acquisitions — on-demand television, music-streaming services, media groups — Novacap sold most of its 29.4-per-cent stake in the company on Wednesday.
“What I liked about it was that there was a critical mass of very affordable, value-depreciated digital music assets and companies,” said Pascal Tremblay, president and managing partner at Novacap.
In December 2007, Novacap invested $10 million in Stingray, when Stingray acquired the Galaxie music channels (now known as Stingray Music channels), providing the distributor with access to more than six million households.
Tremblay says that between 2008 and 2015 Stingray’s annual revenues have grown from $7.1 million to $71 million.
Boyko says he wanted to stay private, but after Novacap sold its stake, Stingray was forced to go public. “This was Plan B,” he said. “Then I realized that as an entrepreneur, going public is like winning the Oscars.”
Stingray has adopted a dual-class share structure, which Boyko says is partly because, as a CRTC-regulated company, it needs to have at least 80-per-cent Canadian control.
He says he also didn’t want to face a hostile takeover soon after going public.
“That was part of my condition, also, that if we go public it was very important that I maintain control of the company. I don’t want to be in the situation where I’m forced to sell the company in four months,” Boyko said.
He says the next step will be finding clients and acquisitions outside of Canada, focusing on the U.S., Latin America, Eastern Europe and Asia.
Boyko says the company wants to invest between $30 million and $50 million a year in new acquisitions. “All of our focus is international growth,” Boyko said.
However, Stingray executives say the company feels at home in Montreal and plans to keep the headquarters and its approximately 250 employees in the city.
“We have a highly educated, incredibly motivated staff who are young, energetic and committed,” said Stingray vice-president Lloyd Perry Feldman.